detroit was once the wealthiest city in america. as known as the arsenal of democracy because in world war ii it went from manufacturing cars to manufacturing airplanes and munitions and tanks. literally the people and the industry in detroit changed the course of history. and thursday, this week, after years of manufacturing job losses and economic decay, the arsenal of democracy filed for bankruptcy. cnn's poppy harlow has been covering the story from detroit. she joins us now. poppy, how does bankruptcy work for an entire city? this is the largest municipal bankruptcy this country has ever seen. >> hey, there, christine. yeah, that's right, it is the largest municipal bankruptcy by far in the history of this country. 18 billion and a half dollars in debt. that is how deep in the red this city is. it's unprecedented. so the way this all comes out in court is yet to be seen. but what we do know is this is going to mean some pretty steep cuts for bondholders here, but really, also, likely cuts for retired and current city workers. th

i'm looked downstairs in the basement, and i've seen where people are literally being held against their will in a city like san francisco, one of the wealthiest cities in the unit. >> people were shocked when a sex trafficking ring was unveiled in the bay area. >> health department. >> since 2004, walsh has shed over 100 pounds. and san francisco has shed 24 illegal massage parlors, operating as modern day brothels. where women suspected of being trafficked live in spaces unfit for animals, just blocks from san francisco's glittering tourist attractions. >> in my opinion, we've made a big impact on human trafficking and prostitution in these parlors in san francisco. >> just how do the par mores operate? walsh says the minute a client is buzzed in, 60 to 100 goes to the house. those tips, investigators say involve compensation for sex acts, and it's money the girls generally keep. >> you have to pay a certain fee to talk to a girl. you walk in and there will be five or six girls sitting on a couch. and they will be improperly dressed, the high heels. >> tonight, they are targeting a place that has numerous complaints from neighbors. >> there

looked down stairs in the basement, i have seen where people are literally being held against their will. in essence, becoming sex slaves in a city like san francisco, one of the wealthiest united states. >> in 2004, san franciscans were shocked when a federal investigation targeting massage parlors uncovered an illegal sex trafficking ring in the bay area. >> out of 11 brothels, approximately 100 women were recovered. >> health department. massage? >> no. >> how come you have the signs still? >> since 2004, walsh has shed over 100 pounds. and san francisco has shed 24 illegal massage parlors operating as modern-day brothels. where women suspected of being trafficked live in spaces unfit for animals just blocks from the glittering tourist attractions. >> in my opinion, we have made a big impact on the human trafficking and prostitution in these parlors of san francisco. >> just how do the parlors operate? walsh says the minute a client is buzzed in, 60 to 100 goes to the house. >> hi. have you been here before? >> no, i haven't. >> okay, it's $60. >> how much? >> $60. >> okay. >> and then you can tip. >> yeah, definitely. >> those tips, investigators say, involve compens

great tragedy of detroit is that, you know, in the middle of last century around 1950, it was the wealthiest city in america. the most powerful city on the face of the earth. it represented, really, what was good about american industry going back to henry ford and the revolution he created in a farm field. you know, be what was good for general motors was good for america. that was a famous phrase. it was the truth too. boy, there's been such a downfall and a downfall starting in the mid '60s and let's go to steve ratner here, because, steve, you've got people on the left that are going to blame let's say the reagan era and the coldness when it came to a series of cuts. you've got conservatives that talk about all of the pension plans and just how excessive they are. the fact that there's a living wage there, quote living wage, that's higher than the regular wage and that there's one regulation after another after another that's brought detroit down. at the end of the day, steve, aren't those just ideological arguments and isn't this really just about an auto industry that moved overseas? >> it

at one time, the fourth most populated city in the country. and one of the wealthiest. it's now becoming the largest city in american history to file for bankruptcy. one hour from now, michigan governor rick schneider and detroit's emergency manager will hold a press conference to discuss the chapter 9 bang ruppcy filing. the city announced it cannot pay its debts. the governor called it a very difficult and painful decision which she had to make on thursday. >> many people may say this is the lowest point in detroit's history. but if we were to do this, detroit would continue going downhill. isn't it time to say, let's stop. detroit is broke. from a financial point of view. and more importantly, the citizens deserve better services. this is one way to get that to happen. >> detroit's mayor dave bing indicated that he disagreed with the decision but he also didn't fight it. >> one of the things that i want to say to our citizens is that as tough as it is, i really didn't want to go in this direction, but now that we are here, we have to make the best of it. >> today, sny

october 23rd as the start date for a trial on any potential objects to the city's bankruptcy eligibility. but across the street from the motor city sits oakland county. it is one of the wealthiesthe country with a aaa bond rating. its population has popped while detroit's has plummeted. brooks paterson the county executive of oakland county. he says that they are quote everything the detroit isn't. welcome to the show. you have been in office for six terms. you've been one of detroit's biggest critics along the way. do you feel like you're saying i told you so now? >> i would never do that i don't know that i'm a critic i think i tell the truth and if you tell the truth about detroit, now you're a detroit barber. melissa: so what is it that you have done differently? >> if you look at detroit, their budget is almost 2 billion. that is a lot of revenue but their expenditures are 2.3 billion, 2.4 billion. they spent more than they take in. it's, the age-old problem. and in oakland, we're very disciplined. we check it every month. we do not overspend our budget. because of that we've had a balanced budget for at least 20 years that i've been there. we've been able to build up surp

the city can bounce back. such a great city. i've been there. motown, motor city, pistons are there, suburbs are beautiful. >> detroit as we knew it, no. the booming, wealthiestcity in the country in the '50s, no. you don't go to detroit, you're sent to detroit. that's kind of me this morning. it needs to change. people need to fundamentally change their mind-set. they can't keep electing the same people. government can't save you, bigger the government, smaller the person. you see giant contributions from unions. the big discrepancy here, people talk about pinks and now they are going to have to cut pensions. no one else outside of public sector unions get these kinds of pensions. i don't. i know you don't. for all intents and purposes if you work for uaw and have a never ending supply of federal bailout taxpayer funds to make your business model work, yeah, you're basically a public sector union. there needs to be a fundamental change, mind-set in policies in detroit and we're not seeing that yet. >> live from detroit. was it a little shady walking into the studio in downtown detroit? we hope you're safe. >> i'm fine. i think they stole my shoes in the car.

the new you birmingham as people were saying last year. a city of 65,000 people. not a big city. not a rich city. sanford is the county seat of seminole county florida. which is the wealthiestthe counties in florida but you sanford is the poorest city in the county and the poorest city in florida. a small police force. a strange place and right next door is lake marry that is affluent. craig melvin talked about the part that was forcibly absorbed into sanford. they brought the cities in sort of against their will and there has been this tension between goldsborrow which maintained its own name and sanford proper. the police force has the long negative ugly history with the black community in sanford. all of that was sort of bunched into the trayvon martin case. this case dragged in issues that had nothing to do with george zimmerman and thog to do with trayvon martin. all of the history burst into the open when this happened. the city has done through a lot. you talk to people and they just want it to be over and they want their city back and they want their reputation back. >> you can't put a price on justice. this is costing them a lot o of money. even going late at night

the city does not have money to pay them. a bankruptcy attorney will determine who gets paid, pensions and everything else, and who doesn't. i think ilt's the biggest story in american business right now. wealthiestin america 50 years ago, porous today. a million people have left in 20 years. i have a lot of friends there. i love michigan, i love detroit. this is going to be ugly. >> is there any speculation about who does not get paid? >> it depends where you are in the creditor sector. from the municipal bond angle, it's going to be interesting to see who gets paid. municipal bonds are sold to you, your grandma, your aunt. you have an aunt in detroit, believe it or not, whose husband worked for them. they're boring, they have tax advantages but they're guaranteed, right? if they cut -- and i know people are going to scream. the unions will scream and say, kill the muni bond holds, who cares, they're buying tax-deferred income. i get it. their pensions are on the line. but if you screw the municipal bonds also -- am i allowed to say that -- if they cut municipal bonds out, the safety program is gone. >> the safety is completely gone. >> sorry. it's a story i mentioned and it's a huge story. >>>

that drove walmart out of the market, took low income residents out of that's jobs help develop the city. >> we cannot continue to be black mailed because they are the wealthiest family in this country. you tell me that you think it's right that their workers, their workers are supported by tack pairs in this country in terms of medicaid, stood stafood stame like. >> are you proposing we take people off food stamps because they work for a company you don't like? >> no, i'm saying they've got to start paying their workers a living wage, not starvation wages, pay health care for their workers, not allow them to go on medicaid. >> if there was another company that wasn't walmart, would you think it was a good idea for them to raise the minimum wage? >> i think our friends at mcdonald's and burger king can start paying a decent wage as well. >> where will the numbers come from? these are not huge profit margins. it's not like they're sitting on piles of cash. i understand that people would like to make more money. i'd love to make more money, you would. but you have to answer the practical question, where would it come from and at what cost? it's going to hurt oth

city. lamborghini of north america put their headquarters there. the complaint is too many people want to pay cash. seven of the 10 wealthiest counties are around the beltway. right now, it is market choice against the choice of people that are enriching themselves at the expense of all of us. >> heather, when we were prepping for this conversation, you describe how there were so many in the millennial generation that regardless of party are dubious and skeptical of politics but are still trying to find ways to do essentially politics by other means. what do you see happening with a young people you are working with at rock the vote? >> to build off of e.j. dionne's question, why are we doing all of these things if we do not want people to be good citizens? i think most young people pretty much believe that those in power do not want us to be better citizens and they are doing a lot of things really well to keep us away from the political system, and they are quite disgusted by the partisan bickering and the distrust of politicians to actually solve the problems that they face every single day. these are real problems. these

city. lamborghini of north america put their headquarters there. the complaint is too many people want to pay cash. more lobbyists employed than ever before. seven of the 10 wealthiest counties are around the beltway. right now, it is market choice against the choice of people that are enriching themselves at the expense of the rest of us. >> heather, when we were prepping for this conversation, you describe how there were so many in the millennial generation that regardless of party are dubious and skeptical of politics but are still trying to find ways to do essentially politics by other means. what do you see happening with a young people you are working with at rock the vote? >> to build off of e.j. dionne's question, why are we doing all of these things if we do not want people to be good citizens? i think most young people pretty much believe that those in power do not want us to be better citizens and they are doing a lot of things really well to keep us away from the political system, and they are quite disgusted by the partisan bickering and the distrust of politicians to actually solve the problems that they face every single day. these are real problems.